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08/01/2025 - 08:19 UTCThe US Dollar Index (DXY), a measure of the USD's value against a basket of major currencies, posted gains on Tuesday after two consecutive sessions of losses ending the session 0.43% higher. Support for the USD comes from the Federal Reserve’s hawkish stance, which continues to elevate US bond yields, providing momentum for dollar bulls. Strong labor market data and upbeat Services PMI readings further helped the greenback trim losses ahead of December’s Nonfarm Payrolls release.
US yields climbed steadily, with the 10-year Treasury note approaching 4.64% and the 30-year yield near 4.87%, bolstered by significant Treasury auctions this week. Economic highlights include December’s ISM Services PMI rising to 54.1, surpassing forecasts, and a notable jump in the Prices Paid Index to 64.4, intensifying inflation concerns. Additionally, JOLTS data revealed job openings at 8.09 million in November, exceeding expectations, reflecting resilience in the labor market.
Risk sentiment soured on Wall Street Tuesday, with major stock indices closing lower as rising Treasury yields pressured the technology sector. The US 500 fell 1.12%, the US 30 dropped 0.44%, and the US Tech 100 slid 1.14%. Tech stocks faced headwinds as Nvidia tumbled over 6% after reaching record highs earlier in the week, while Tesla declined over 4% following a Bank of America downgrade citing valuation concerns.
On the energy front, oil prices edged higher on Tuesday, supported by tight supply concerns linked to Western sanctions on Russia and Iran, as well as optimism over increased Chinese demand. Brent crude settled ended the session 1.30% higher, while U.S. West Texas Intermediate (WTI) closed the day rising 1.86%
On the cryptos front, Bitcoin and Ethereum both saw losses on Tuesday, with Bitcoin dropping by approximately 5.15% and Ethereum declining by 8.36%. The significant decline was attributed to a $205 million liquidation event that contributed to the market’s pullback. Despite the drop, there remains strong institutional interest in the market, which continues to fuel long-term optimism for the crypto space.
This week, key data releases from both sides of the Atlantic could influence the pair further. In the Eurozone, markets will monitor services sentiment, producer prices, and German retail sales. In the U.S., attention turns to Fed speeches, the ADP National Employment Change report for December, Initial Jobless Claims, and the minutes from the Federal Reserve’s most recent meeting.
The Euro struggled on Tuesday, reversing course against the US Dollar after an earlier attempt to stabilize. The EUR/USD pair ended the day down 0.40%, as a mix of political and economic factors drove investors toward the Greenback.
Markets reacted strongly to U.S. President-elect Donald Trump’s threat to impose tariffs on Canada and Mexico, a move that sparked risk aversion and bolstered demand for the U.S. Dollar. Moreover, robust U.S. economic indicators added further momentum to the Dollar. In the Eurozone, inflation data came in line with forecasts but failed to support the Euro.
Gold prices advanced on Tuesday, though they retreated from daily highs due to robust US economic data and comments from President-elect Donald Trump during a press conference.
The latest US economic reports highlighted strength in the labor market, with a rise in job openings reassuring investors of its resilience. President-elect Trump also made headlines with remarks about reclaiming control of the Panama Canal and plans to impose tariffs on Canada and Mexico. These statements boosted the US Dollar, limiting Gold's upward momentum.
Oil prices climbed on Tuesday, driven by concerns over tightening supplies due to Western sanctions targeting Russia and Iran, as well as expectations of stronger Chinese demand.
The American Petroleum Institute (API) reported a sharper-than-anticipated drop in U.S. crude oil inventories, with stockpiles falling by approximately 4 million barrels for the week ending January 3. This significantly exceeded economist projections of a 250,000-barrel decline. The official government inventory report is expected later today.
U.S. main indexes closed lower on Tuesday, pressured by a rise in Treasury yields following economic data that raised concerns about persistent inflation, dampening expectations for further Federal Reserve rate cuts.
Tech stocks were hit hard, with Nvidia (NVDA) leading the sector lower, falling 6% after early gains were reversed. The chipmaker’s retreat followed rising Treasury yields, which weighed on growth sectors like tech. Nvidia had briefly reached a record high just a day earlier. At the CES 2025 tech conference in Las Vegas, Nvidia CEO Jensen Huang highlighted the company's efforts to expand its AI-driven data center technology into consumer PCs and laptops.
Wider market optimism was also dampened by comments from U.S. President-elect Donald Trump, who denied media reports suggesting his administration would pursue a less aggressive tariff strategy than initially feared. The potential for Trump’s expansionary and protectionist policies, which could increase inflation and disrupt global trade, continues to weigh on market sentiment.
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